03/17/2009 11:00PM

Maryland warns three account-betting firms


The Maryland Racing Commission has warned three large account-wagering companies that they will be shut down in the state as of March 31 unless they reach an agreement with racetracks on the distribution of revenue from betting.

The warning was issued after Alan Foreman, the legal counsel for the Maryland Thoroughbred Horsemen's Association, complained at a Tuesday commission meeting that Twinspires.com, XpressBet, and Youbet.com had been taking wagers on Maryland races and from Maryland residents despite the lack of an agreement with Laurel Park and Pimlico since the beginning of the year. Maryland law requires the agreement.

The situation highlights the often-complex web of entanglements in the account-wagering market. Laurel and Pimlico are owned by Magna Entertainment, which owns XpressBet and is a co-owner with Churchill Downs Inc. in a simulcast-marketing partnership, TrackNet. Churchill owns Twinspires.com.

Tom Chuckas, the president of Laurel and Pimlico, acknowledged on Wednesday that the tracks do not have agreements with the account-wagering companies. He said he had talked to TrackNet representatives after the Tuesday meeting in the hopes of resolving the situation.

Scott Daruty, the chief executive of TrackNet, did not return a phone call on Wednesday.

Typically, in cases of competing claims by tracks and horsemen over shares of revenue, horsemen have exercised rights under the federal Interstate Horseracing Act to withdraw their consent for the account-wagering companies to offer wagering on signals at their tracks.

In this case, however, the Maryland horsemen have not exercised those federal rights, in part because state law claims that in the lack of an agreement, all wagers through an account-wagering operation would be divided as if the bet were made ontrack. Horsemen receive a far higher share of betting revenue on ontrack wagers than on bets through account-wagering operations.

"Frankly, I'm better off collecting bets that have been made based on the on-track takeout than putting a stop to it," Foreman said on Wednesday.

Under that interpretation, according to Foreman, Youbet.com owes horsemen in excess of $1 million for bets made through the operation since its last contract expired, in June of 2007.

Because Laurel and Pimlico have assigned their negotiating rights to TrackNet, Youbet.com must negotiate with TrackNet for a new contract for the tracks. Youbet officials did not return phone calls on Wednesday.